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Are Requests for Proposals a waste of money?

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Requests for Proposals are commonplace for any agency. But Brian Pullen believes RFPs are wasting time and money, and that there are better ways to hire agencies.

If you've ever worked for an agency, you’ll likely be familiar with the Request for Proposal (RFP) and the process surrounding them. The RFP has increasingly become a dreadful 50-plus page document that, for all its pages of text, often has very little information.

My real concerns go much deeper than just document length and the incoherent nature of most RFPs. In fact, I believe that the RFP process is wasting time and money while leading to poor outcomes.

Until recently, I took the RFP process for granted, assuming that this was simply the way it had to be. Now I believe that the process can change and I hope to explore new ways organisations can hire agencies. In order to discuss ways the RFP could change, we first have to explore what is wrong with it today.

What is a RFP?

The RFP, or Request for Proposal, is a document and process that helps organisations hire outside agencies. For the purpose of my discussion, I’m talking about software projects, but it’s commonly used for everything from construction projects and interior design to catering services and many others.

The RFP document outlines the project scope, providing details, such as requirements, restrictions, and intended timelines. Agencies are then invited to submit a proposal based on what is found in the RFP.

The organisation selects a winner based on its own internal criteria that’s often some combination of price, timeline, reputation and the proposed solution.

Why was it made?

In principle, the RFP was created to solve a series of issues, with fairness, structure, clarity and distribution being primary among them. It was created to provide an equal opportunity to any company that wished to pitch and intended as an improvement to closed door deals done by executives with little oversight.

The process also creates a standardised structure for both creating the RFP and submitting proposals. The RFP was also created to bring clarity to the agencies pitching by making communication of the key requirements more organised upfront.

If people can work together with open communication, better ideas can be found and projects created

Finally, by having a standardised document that contained all necessary information, it could be widely distributed allowing for many agencies to obtain it and pitch, which would result in more options. Unfortunately, I believe that the RFP process undermines the very issues that it set out to solve.

Preparing a RFP

The first step is often where the most issues arise: with the creation of the RFP itself.

Companies typically form a committee to produce technical analysis, timelines, budgets and determine risk factors along with overall strategy. Quite often these teams lack technical and other skills required to do this effectively. Other times they have the skills but are biased to a solution that they believe in, which poses another serious issue: once the document is made, organisations take it as representative of the best and only solution.

Organisations will often commit to unrealistic ideas of budget or time based on a notion that the company is such a desirable client that agencies would work at a reduced cost. For the rest of this article, we’ll assume that all RFPs are reasonably well-made and talk about other issues.

Anything but fair

I believe the central reason for the RFP is to facilitate fairness and accountability, but I don’t believe that it has accomplished this goal. By providing a framework for accountability and oversight within an organisation, the hope was that it would lead to a fair and open competition for agencies. In theory, this would prevent deals done on the golf course with greased palms between executives. In practice, I don’t believe that it prevents this issue at all.

It’s been my experience that many RFP processes are either won through a private deal or rigged to begin with. A rigged RFP process is one where the winner is determined prior to the RFP going out. This winning company is often an incumbent who has built a previous product or worked with one of the key stakeholders in the past.

In this case, the RFP is simply satisfying a bureaucratic need of the organisation to follow procedure and to appear fair rather than actually being an open contest. I believe most of the following issues stem from procedures created in the name of fairness and accountability.

The current RFP process attracts low quality agencies and pitches

Overly structured

The RFP was created as a structured process with the aim of simplifying the process, but I believe this leads to a lack of innovation.

By structure, I’m referring to the structure of the RFP document, communication and submission process. An over-structured RFP document is often too specific about project details.

This specificity discourages agencies from being creative and proposing better solutions to the core problem, as companies are often already sold on the solution in their RFP. In fact, it’s often not in an agency’s best interest to even point out errors in the proposed solution.

This issue is made worse by a typical tightly structured communication policy that doesn’t allow room to discuss new ideas prior to the pitch process. Finally, because of strict rules in the submission process, it’s risky to propose a new idea as there hasn’t been an opportunity to discuss it with the client beforehand.

Confusion instead of clarity

The most critical step of any project is the early discovery phase of gathering requirements while understanding opportunities and risks. The RFP process tries to make this clear by having the organisation spend days, weeks, or even months preparing detailed analyses of these factors.

Unfortunately, as this legwork is typically done by staff without a clear understanding of the issues, this information is often inaccurate, contradictory, unnecessary, or just plain wrong.

Rigid policy

To make matters worse, there’s often a rigid communication policy dictated by the RFP that prevents any direct conversation between agency and organisation.

Instead, there’s often a question and answer period that allows all agencies to submit questions by a deadline, after which the client creates a single document with all answers and sends it to each participating agency.

In this way, all agencies get answers to all questions in an attempt to be more fair and open, but, in practice, it’s too rigid of a process and makes it difficult to get real insights. This lack of direct communication also prevents any real analysis of culture fit, possibly creating issues further down the road.

Quantity over quality

The final issue the RFP was intended to solve is that of distribution. The thought is that, if you have a structured document and a process that most agencies are familiar with, you will attract more of them to pitch. While this may be true, it often equates to quantity over quality where the best agencies choose not to apply. This has largely to do with the issues I’ve outlined above in particular that of fairness.

Creating a great proposal is time consuming and can be costly for an agency. Thus, agencies often prefer to respond to RFPs only when they believe they have an advantage through a connection or insight that others may not have. This lack of incentive to pitch drives many of the top agencies away and often encourages others to put little energy into their proposals.

Despite the RFP aiming to create fairness, the process is anything but fair

The solution?

It’s clear that the current RFP process leaves much to be desired, but the real question is: is there a better process? While I don’t claim to have a silver bullet to all the problems I’ve outlined, I do believe I have a good start. The basis of my solution has three pillars: open communication, divergent solutions and people over process. Let’s take a look at the steps of this proposed system:

The organisation has the intent to act and decide on the problem it needs solved.

The organisation hires an outside consultant with expertise in strategy, design and technology to help assess the problem and propose a series of solutions to provide perspective.

The organisation creates a simple one-page document, which outlines the details of the company, the problem, the rough timelines as well as the submission criteria.

The organisation submits the document in the same way as RFPs today, with a particular focus on directly encouraging desirable agencies.

Each agency that’s interested in the project submits its ‘intent to participate’ by a given deadline.

The organisation refines the list of agencies that have submitted by removing those that don’t meet the basic criteria of experience, reputation, etc. Meetings are then scheduled in with all the agencies on the list.

The meeting with each agency provides the opportunity to learn more about each other while also allowing the agency to ask any necessary questions to create its own understanding of the desired outcomes and constraints of the project. From this meeting, the organisation can further refine the list by cutting out agencies that don’t make a good fit.

Each remaining agency is given a deadline to submit a proposal. This should ideally be a period of no less than two weeks from the initial meeting. During this period, the agencies have access to key stakeholders at the organisation to continue to ask direct questions and pose ideas.

A final pitch is given by each agency and reviewed by key stakeholders at the organisation as well as the consultant hired in step two.

The current process makes communication too difficult. A rigid communication policy often prevents any direct conversation between the agency and organisation

In conclusion

The RFP currently used to solicit agencies for a project is broken, with every aspect of the process stifling creativity and hindering excellence.

However, there is a better way. The process I’ve outlined above capitalises on the expertise and creativity of each agency allowing them to each generate their own ideas and solutions.

Through open communication, each agency can get a deep understanding of the organisation and a clear picture of the problem to be solved. I believe this process solves the issues of fairness, structure, clarity and distribution that I identified earlier. It is faster, cheaper and more attractive to agencies, thus providing better results.

I would love to hear your feedback and ideas to help grow this way of thinking to change the RFP.